ESOP studies on Linux laptop market barries public

The association ESOP from Portugal made available two papers of original research. They concern what they call an “artificial exclusion of Linux-based laptops”. I had the opportunity to see the study earlier. Both studies can be freely accessed from ESOP. It is not easy to calculate economic effects but ESOP applies their own innovative approach for calculating losses.

The first study analyses the national economic impacts of introducing a series of locally-assembled laptops with an Open Source system and applications. This study measures the effects on GDP, employment, trade balance and discretionary income. The idea had a previous successful try-out in a government project called e.iniciativas, where the debuting Linux laptop achieved a 10% market share. Later on, despite several attempts, Portuguese retailers were altogether unwilling to supply identical laptop solutions, when the e.iniciativas experience had clearly established that such products would be in demand.

The second study analyses this market behaviour, which is typical of retail oligopolies. The analysis derives a probability model for retail markets and addresses several malfunctioning phenomena in the frame of the existing European legislation for competition. This model can be applied to other markets where the imbalance between production and distribution control is felt and where distribution is highly concentrated.

They find the current market organization unpleasant:

The theoretical basis allows for the identification of two critical issues:

1) a small number of intervening parties holds the power to choose which products become available for millions of citizens

2) different degrees of decision-coupling between parties may show within an oligopoly

This matter has been neglected by our national Competition Authority and apparently not corrected by European institutions.
 

ESOP.pt may trigger an entertaining debate with their papers.

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IE bundling and the mad client desease

In European competition enforcement cases you can request a hearing which you should better do. Of course it is optional, an opportunity for you. Same in the recent Internet explorer bundling case.

Opera, a Norwegian browser manufacturer filed a compaint, the competitor’s product Internet Explorer is as we know bundled with the Windows operating system, but bundling is contra legem when you have a dominant market position. Of course IE bundling was yesterday’s fight. So to the great surprise a year later a statement of objections was communicated by the Commission to Microsoft. A company may then request a oral hearing where it can present its counter-arguments and submit a statement. The statement is submitted, 250 pages. Microsoft also said it wanted a hearing. The Commission sets a date for your hearing. You are supposed to attend it, what else…? Forget everthing you know about the common code of conduct:

The dates the Commission selected for our hearing, June 3-5, coincide with the most important worldwide intergovernmental competition law meeting, the International Competition Network (ICN) meeting, which will take place this year in Zurich, Switzerland. …, it appears that many of the most influential Commission and national competition officials with the greatest interest in our case will be in Zurich and so unable to attend our hearing in Brussels. …We pointed out that there’s no legal or other reason that the hearing needs to be held the first week of June. We believe that holding the hearing at a time when key officials are out of the country would deny Microsoft our effective right to be heard and hence deny our “rights of defense” under European law.

In the New York Times it sounds even more silly:

Microsoft decided not to give oral evidence in the case after it was unable to persuade the commission to move the meeting, scheduled for June 3 through 5, so that it did not conflict with a global antitrust conference in Zurich that draws European antitrust regulators.

or in the original tune:

Therefore, we reluctantly notified the Commission that we will not proceed with a hearing on June 3-5. While Microsoft maintains its request for a hearing at a different date, that request has been denied and the Commission hearing officer has deemed Microsoft to have withdrawn its request for a hearing.

or with media spin which makes the incompetence even more apparent:

Microsoft calls off EU antitrust hearing over IE
Blames inflexible EU agency, scheduling conflict, as it cancels June defense

Whoever tries to slap in the face of the European hearing officer because some potential national observers prefer to go to an international conference, looks pretty incompetent. It was reported also Commissioner Kroes intended to honour the hearing of DG competition with her attendance. It seems also inspiring how failure is spinned in a way to smear the Commission and dig the hole deeper.

“It’s pretty unheard of for a company to cancel its own hearings in Brussels,” said one antitrust lawyer.

in the Financial Times. And Stephen Kinsella shows how to do diplomatic damage control:

“The fact that they are often scheduled without much consideration for the wishes of the defendants does tend to reinforce that impression [of irrelevance].”

Indeed, as said before the proposed defense sounded not very well thought.

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Record fines against Intel

Record fines against the chip maker Intel. The European Commission DG competition imposed a fine of 1.06 billion Euro.
Commissioner Kroes: “Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years”.

Press release of DG Competition

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